Dumbest Moments in Business 2008

1. Detroit Pleads Poverty in Style

Like someone arriving at a food bank in a limousine, the chief executives of the three major U.S. automakers spark outrage when they fly their corporate jets to Washington D.C. to beg Congress for a multi-billion dollar bailout. Yes, we know that corporate jets are often a cost-effective way for the heads of far-flung corporations to get around. But someone should have known this wasn't going to look good (and, sure enough, Congress sent the auto chiefs away empty-handed). At the very least, couldn't they have shared a ride? -- By Peter Valdes-Dapena, CNNMoney.com senior writer
Next: Dumbest Moment No. 2

2. Lamest Road Trip Ever

Let's see ... corporate jets are a no-no ... the subway doesn't go that far ... A bike ride might just kill us ... I know! Let's drive the 10 hours from Detroit to D.C. -- in one of our cool hybrid cars! Given a second chance after the private-jet fiasco to plead their case before Congress, the Detroit 3 take to the road (separately, of course) in a company fuel-sipper. In the case of Chrysler's Robert Nardelli, the exercise in overkill is particularly awkward: The Chrysler Aspen Hybrid he drove will soon be discontinued. -- By Peter Valdes-Dapena, CNNMoney.com senior writer
Next: Dumbest Moment No. 3

3. Paulson's 3-Page Plea

Days after Lehman Brothers collapses and two other giants teeter on the abyss, Treasury Secretary Henry Paulson submits his plan for saving the U.S. financial system. All of three pages, the proposal seeks carte-blanche access to $700B in government funding to buy up troubled mortgage assets with scant details on how or where the money will be spent. Just as galling, he includes a provision in the bill that will exempt his spending from court challenges. Congress axes the legal cloak. But the damage is done, and the proposal fails in the House -- triggering another massive market sell-off. -- By Colin Barr, Fortune senior writer
Next: Dumbest Moment No. 4

4. Bloating up the Bailout

Maybe three pages wasn't such a bad idea after all ... When Congress is done with it, Paulson's proposal for saving the U.S. financial system balloons to 451 pages and is loaded with pork barrel spending -- including, unbelievably, a cut in taxes on toy arrows and an extended tax break on "wool products." Backers of the arrow tax exemption -- section 503, for the record -- say it reverses a wrongheaded 2004 law that sharply increased tax rates on cheap kids' arrows. -- By Colin Barr, Fortune senior writer
Next: Dumbest Moment No. 5

5. Mozilo's 'Disgusting' Reply-All

Already under attack as the overpaid, over-tanned and over-zealous pioneer of subprime mortgages, former Countrywide CEO Angelo Mozilo doesn't do himself any favors in May after reading a customer's e-mailed plea for help with his home loan. Intending to forward the missive to a colleague, Mozilo instead hits "reply all" and sends a response calling the beleaguered homeowner's request "unbelievable" and "disgusting." Mozilo's heartfelt reply makes its way onto the Internet -- and [he] finds himself out of a job after Bank of America acquires Countrywide in July. -- By Penelope Patsuris, CNNMoney.com senior producer
Next: Dumbest Moment No. 6

6. An iPhone App for Just $999.99

The release of the new Apple iPhone in July introduces to the masses the world of mobile video games and other time-sucking applications designed by non-Apple software developers -- most of them available for less than $10. But one application sneaks past Apple's gatekeepers and onto the company's new App Store: "I Am Rich," a $999.99 screen-saver whose sole feature is a glowing red jewel. Apple gets blasted for making the application available for sale and then quietly removing it, but the real losers? The eight suckers who bought it. -- By Michal Lev-Ram, Fortune reporter
Next: Dumbest Moment No. 7

7. Paulson's 'Bazooka' Backfires

As shares of Fannie Mae and Freddie Mac plunge on worries about their viability, Treasury Secretary Henry Paulson assures Congress that merely promising to give mortgage lenders access to Treasury funding would calm market fears -- at no cost to Uncle Sam. "If you've got a squirt gun in your pocket, you may have to take it out," Paulson tells legislators. "If you've got a bazooka and people know you've got it, you may not have to take it out." Congress delivers, but investors aren't buying it. Two months later, Treasury takes over both companies in a move that could cost billions. -- By Colin Barr, Fortune senior writer
Next: Dumbest Moment No. 8

8. Fannie's Delusions of Grandeur

Fannie Mae CEO Dan Mudd proves once again that his crystal ball is malfunctioning. In May, Mudd predicts that the government-sponsored mortgage lender will "feast" on weakened competition in the mortgage market -- even as its own prospects dim amid mounting credit losses and asset writedowns. By September, on the brink of collapse, Fannie gets a new owner -- Uncle Sam -- and Mudd loses a job. -- By Colin Barr, Fortune senior writer
Next: Dumbest Moment No. 9

9. Sex for Oil

This fall, the division of the Department of Interior responsible for granting leases for energy exploration and production in federal waters is caught with its pants down. The agency's Inspector General finds that staffers were taking gifts, having sex and engaging in illegal drug use with employees of some of the oil companies they oversee. As the report detailing the ethical abuses puts it: "We ... discovered a culture of substance abuse and promiscuity in the ... program." -- By Steve Hargreaves, CNNMoney.com staff writer
Next: Dumbest Moment No. 10

10. Global Warming Is a Crock?

The General Motors exec behind the Chevrolet Volt electric car hands environmentalists another twig to beat GM with when he reportedly calls global warming "a crock of sh-t." Bob Lutz, GM's vice chairman for product development, later addresses the uproar on his own blog: "General Motors is dedicated to the removal of cars and trucks from the environmental equation, period. And, believe it or don't: So am I!" -- By Peter Valdes-Dapena, CNNMoney.com senior writer
Next: Dumbest Moment No. 11

11. Housing (Non) Rescue

Remember Hope for Homeowners? We didn't think so. In July, Congress passes the only housing rescue to date: a plan to guarantee up to $300 billion worth of mortgages and prevent more than 300,000 foreclosures. But to participate, banks must take steep losses -- and doing so is voluntary. The anti-climactic upshot: A piddling 321 applications have been filed since the program's Oct. 1 launch -- and not one loan workout has been completed, according to the U.S. Department of Housing and Urban Development. -- By Penelope Patsuris, CNNMoney.com senior producer
Next: Dumbest Moment No. 12

12. Cox's Short-Selling Ban

Under attack for not doing more to stop the market plunge, SEC chief Christopher Cox finally institutes a temporary ban on shorting 799 financial stocks. It "will restore equilibrium to markets," Cox promises. But shares in banks, brokerages and insurance companies continue to plunge, losing a quarter of their value during the three weeks the order was effective. Some investors say the short ban hastened the flight of capital from stock and bond markets, by showing the government could intervene in markets in unexpected and troublesome ways. -- By Colin Barr, Fortune senior writer
Next: Dumbest Moment No. 13

13. McCain's Economic Denial

At least he warned us: On the morning of Sept. 15, as Lehman Brothers declares bankruptcy, Republican presidential candidate John McCain declares "the fundamentals of this economy are strong." By day's end, the Dow falls more than 500 points, the date becomes known as Black Monday, and McCain starts backpedaling fast. Maybe we should have seen this coming: In late 2007, McCain admits "the issue of economics is not something I've understood as well as I should," adding, "I've got Greenspan's book." -- By Nina Easton, Fortune Washington editor
Next: Dumbest Moment No. 14

14. Obama's Tough Talk

In a rare off-message moment for Barack Obama's presidential campaign, a top economic adviser privately assures Canadian officials that his candidate didn't really mean it when he threatened to renegotiate the NAFTA, which U.S. blue-collar workers complain has shifted jobs to Canada and Mexico. "Political maneuvering" was how Austan Goolsbee described Obama's protectionist rhetoric to Canadian authorities. Smart politics -- until a memo of Goolsbee's meeting leaks out and Goolsbee is banished to no-media-allowed shed for the remainder of the election. -- By Nina Easton, Fortune Washington editor
Next: Dumbest Moment No. 15

15. Microsoft Overbids for Yahoo

The headlines seem so quaint now: Microsoft makes a $44.6 billion play for Yahoo in yet another bid to catch up to Google. The $31-per-share offer represents a 61% premium over Yahoo's price at the time of the February overture. Microsoft's strategy makes some sense, but CEO Steve Ballmer fails to anticipate Yahoo chief Jerry Yang's intransigence, which ultimately scuttles any chance of a deal. Nor does Ballmer foresee the economic crisis that, by year end, is dragging down the tech sector. With Yahoo shares trading at $12 apiece, the company is now worth $17 billion. -- By Adam Lashinsky, Fortune editor at large
Next: Dumbest Moment No. 16

16. Yahoo Turns Down Payday

If Microsoft's offer for Yahoo was wrong-headed, Yahoo's opposition to it was downright bone-headed. It took until July, when Microsoft finally throws up its hands and walks away, for Yahoo CEO Jerry Yang to fumble a deal that would have rewarded shareholders with a payday that was three times what Yahoo shares were fetching at year-end. Along the way, Yahoo flirts with Google -- only to see any potential deal scuttled by antitrust regulators. As 2009 approaches, Yahoo's chances of turning itself around look slim. -- By Adam Lashinsky, Fortune editor at large
Next: Dumbest Moment No. 17

17. SEC's Madoff Miss

It took plunging stocks to bring to light the largest Ponzi scheme in U.S. history -- an estimated $50 billion fraud orchestrated by Bernard L. Madoff, one of Wall Street's best-known money managers. The scheme -- in which money from new investors is disguised as market returns for early investors -- allegedly goes on for decades before Madoff effectively turns himself in. As news reports reveal that the SEC had probed Madoff and his firm over the years, chief Christopher Cox cops to the screw-up and "apparent multiple failures over at least a decade to thoroughly investigate these allegations." -- By Colin Barr, Fortune senior writer
Next: Dumbest Moment No. 18

18. Rage Against Oil Speculators

With oil prices skyrocketing toward their $147-a-barrel high in July, people smell a rat. Oil traders, hedge funds, Wall Street types ... they're all to blame for artificially inflating the price of crude and reaping huge profits at the expense of drivers everywhere. Or so the thinking (and Congressional hearings) goes until prices suddenly collapse throughout the fall, bringing oil down to about $37 a barrel. The culprit this time? Softening demand amid a reeling global economy. So much for thinking fundamentals don't matter. -- By Steve Hargreaves, CNNMoney.com staff writer
Next: Dumbest Moment No. 19

19. The 'Death' of Steve Jobs

Newspapers prepare obituaries of famous people before they die, but Bloomberg News accidentally releases an obit for Apple CEO Steve Jobs, who -- despite a well-publicized brush with pancreatic cancer -- is still alive and kicking. As if that wasn't enough, in October a post on CNN's user-generated site, iReport, claims that Jobs has suffered a heart attack. The erroneous report sends Apple's stock down 10% in just 10 minutes. At his next media appearance, Jobs appears in front of a giant screen with the message, "The reports of my death are greatly exaggerated." -- By Michal Lev-Ram, Fortune reporter
Next: Dumbest Moment No. 20

20. Gramm's 'Mental Recession'

In early July, as the financial crisis spreads to Main Street, McCain campaign co-chair and former senator Phil Gramm appeals to voters and their economic anxieties by calling them a "nation of whiners" and dismisses a troubled economy as a "mental recession." McCain denounces his words and Gramm steps down, but the damage is done. -- By Nina Easton, Fortune Washington editor
Next: Dumbest Moment No. 21

21. Bill Miller's Bad Bets

The Legg Mason manager famously beat the market 15 years in a row, but now the market is returning the favor -- with a vengeance. Miller's Legg Mason Value Trust was down 59% through Dec. 2, 2008, posting a far worse showing than the S&P 500, which was down "only" 38%. Miller's problems stem mostly from big bets on beaten-down financial companies earlier this year, many of which then got even more beaten down. Among the biggest losers for Miller were Bear Stearns, AIG and Freddie Mac. -- By Colin Barr, Fortune senior writer
' Unedited Version at Fortune.com
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